The Andhra Pradesh government's attempt to offload 4.69 per cent stake in VST Industries Ltd has taken a new turn with ITC Ltd opting to pitch for it. ITC subsidiary Russell Credit has substantial holding in VST.

The Russel Credit move was significant for if its bid was successful, it will take up the ITC holding in VST to 15 per cent, triggering a mandatory 20 per cent open offer. The VST scrip soared on Tuesday.

A top ITC source indicated that Russel Credit, which held 10.48 per cent stake, would submit the price bid. Bids were likely to be submitted close to the deadline of August 29.

Others eyeing for the government's stake include a Godfrey Philips subsidiary Chase Investments, R S Damani-controlled Bright Star Investments, IL&FS and two stock brokers namely C V Desai and Shreyans V Mehta.

If Russel Credit wins the price bid for the government's holding of 7.23 lakh (723,000)  shares, it would create a similar situation when Damani made a 20 per cent open offer two years ago. The offer, however, did not succeed.

Experts said if Russell Credit succeeded, its holding would be close to that of VST's principal promoter BAT plc.

A successful 20 per cent offer, following a 15 per cent stake would throw open the question of management control in the cigarette company.

BAT cannot bid for the shares as fresh foreign investment in the tobacco sector was banned.

In any case BAT's proposal would have to be routed through the Foreign Investment Promotion Board (FIPB) and unlikely to be cleared ahead of the deadline.

Rumour mill has been working overtime suggesting that all the players would try to eliminate the chance factor in price bidding by hiring dummy investors.

Experts are raising their fingers at the individuals, Desai and Mehta, as fronts. Desai refused to comment while Mehta could not be contacted.

Godfrey Philips' interest in VST also assumes significance in view of the fact that Damani -- through his investment firm Bright Star Investments--controls 19.56 cent stake in VST, while BAT holds 32.16 per cent.

The interest shown for taking over the government's stake has sent the VST stock through the roof.

The Rs 10 paid-up equity of the company reached to the 52-week high of Rs 171 on Tuesday.